Best Volume Indicators in Forex Trading

 In trading, volume is a very essential tool in the sense that it’s hard to make any sober trading decisions without volume analysis. 3 things to note; trading decisions will always be based on price, volume and open interest. Ideally, volume is responsible for price movements and trend formation. Therefore, without volume, you won’t know the price direction and you stand losing out your investment. That’s just how important volume in trading is. Let’s look at how volume is measured and how you can apply volume analysis in your trading.

How to measure Volume

Volume can only be measured through counting tick movements. With volume indicator, you are able to see how many ticks the price moved up or down within a specified timeframe. In a busy market trend, obviously the number of ticks will go up by every second. A clear indication of increase in trading volume.

Best Volume Indicators

·         Volume Oscillator indicator – the indicator moves above and below the middle line. Above the center line gives a positive value and below the center line, a negative value. A positive value indicates a prevailing trend that is strong; whether bullish or bearish. A negative value shows a weak prevailing market trend.

·         Volume Zone Oscillator (VZO) – is fairly new in the world of trading. It’s based on the notion that volume will always come before the rise or fall in price.

Why use volume indicators in Forex?

The answer is simple, volume analysis is a powerful tool for understanding price movements and forex trends. Volume highlights instances of abnormally high sales or purchases in the market. What happens during such instances, you can take the opportunity to place your bets alongside major traders. Additionally, volume analysis highlights trend strength or weakness before it even hits the price chart hence guiding your trading decisions.